Los Angeles County Public Transit Could Face Blowback from Credit Crisis

Add another potential victim to the long list of those already claimed by the rolling credit crunch: Los Angeles County's Metropolitan Transportation Authority (MTA). Yes, in another sign of the financial crisis's pervasiveness, the public transit authority could be forced to slash services for its 1.5 million customers because of a series of (now toxic) deals it made with insurance giant American International Group.

The Los Angeles Times reports that the agency may need to quickly raise hundreds of millions of dollars to repay investors. The financial woes will likely extend to other major transit agencies, such as Metrolink, that made similar deals in the past -- deals that were encouraged by tax laws until the early 2000s.